Forum Discussion

BMX1's avatar
BMX1
Contributing User
2 years ago
Solved

Expenses paid by Company A on behalf of Company B

Hi,

 

I have occurances where Company A will pay for an expense incurred by Company B. Company A and B are related but operate in different industries.

 

Can you please advise how the transactions should be treated in both companies records (Spend Money/Pay Bill/Sales Invoice and which expense/income or asset/liability account is used) in MYOB. 

 

Thank you

  • Tracey_H's avatar
    Tracey_H
    2 years ago

    Hi BMX1 

     

    Thanks for your post. One way to handle this situation is to create loan liability accounts for each company. So in Company A create a a loan liability account for Company B and in Company B create a loan liability account for Company A. Make sure the Account Type is Credit card.

     

    When Company A pays a Company B expense:

    1. in Company B record the expense as you normally would. If you record a Spend Money transaction change the Pay from account to the Company A loan liability account. If you record a Purchase transaction when you record the Pay bills change the Pay from account to the Company A loan liability account.
    2. in Company A record a spend money transaction with the Pay from account as the bank account and allocate to the Company B loan liability account

    In Company B the expense will be correctly recorded as an expense of that business without affecting the bank account. In Company A the bank account will show the payment made without affecting the P&L. The loan liability accounts also allow you to keep track of the amounts each company 'owes' the other.

     

    If Company B reimburses Company A:

    1. in Company B record a Transfer money transaction from the bank account to the Company A loan liability account
    2. in Company A record a Transfer money transaction from the Company B loan liability to the bank account

    Please let me know if you need further help.

     

    If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.

1 Reply

Sort By
Replies have been turned off for this discussion
  • Tracey_H's avatar
    Tracey_H
    Former Staff
    2 years ago

    Hi BMX1 

     

    Thanks for your post. One way to handle this situation is to create loan liability accounts for each company. So in Company A create a a loan liability account for Company B and in Company B create a loan liability account for Company A. Make sure the Account Type is Credit card.

     

    When Company A pays a Company B expense:

    1. in Company B record the expense as you normally would. If you record a Spend Money transaction change the Pay from account to the Company A loan liability account. If you record a Purchase transaction when you record the Pay bills change the Pay from account to the Company A loan liability account.
    2. in Company A record a spend money transaction with the Pay from account as the bank account and allocate to the Company B loan liability account

    In Company B the expense will be correctly recorded as an expense of that business without affecting the bank account. In Company A the bank account will show the payment made without affecting the P&L. The loan liability accounts also allow you to keep track of the amounts each company 'owes' the other.

     

    If Company B reimburses Company A:

    1. in Company B record a Transfer money transaction from the bank account to the Company A loan liability account
    2. in Company A record a Transfer money transaction from the Company B loan liability to the bank account

    Please let me know if you need further help.

     

    If my response has answered your enquiry please click "Accept as Solution" to assist other users find this information.